[April 14, 2014]SEOUL (Reuters)
— South Korea's state
health insurer said on Monday it was seeking an initial 53.7 billion
won ($51.9 million) from three tobacco companies, including the
local units of Philip Morris and British American Tobacco, to offset
treatment costs for diseases linked to smoking.

The National Health Insurance Service (NHIS) said it
was suing the two global cigarette makers, as well as local market
leader KT&G Corp, in a South Korean court.

Only four tobacco lawsuits have ever been heard in South Korea, all
by individuals or families, and there is no precedent of a
successful action against a tobacco company.

"We believe the NHIS, as it takes responsibility for the health of
the public and oversees the insurance budget, has a natural duty to
bring this tobacco lawsuit," NHIS lawyer An Sun-young told
reporters.

The damages were calculated based on data on payments by state
insurers for patients with three cancer types associated with
smoking, NHIS added. The insurer has previously said it spends more
than $1.6 billion each year on treating smoking-linked diseases.

The lawsuit is the first by a state organization against tobacco
firms among 37 countries and territories in the Western Pacific,
according to the World Health Organization's Western Pacific Region
Office (WHO WPRO).

KT&G said it would base its response to the lawsuit on previous
legal processes. Philip Morris was not immediately available for
comment. BAT declined to comment.

Philip Morris and BAT combined account for about a third of South
Korea's $9.3 billion tobacco market. KT&G accounts for the remaining
just over 60 percent while Japan Tobacco International (JTI), an
affiliate of Japan Tobacco Inc, has the smallest market share at 6.4
percent. JTI was not named in the lawsuit.

The NHIS lawsuit comes after South Korea's Supreme Court ruled last
week in favor of KT&G on a separate case brought by individuals.